Are blue-chip heavyweights HSBC Holdings plc (LON:HSBA), Royal Dutch Shell Plc (LON:RDSB) and GlaxoSmithKline plc (LON:GSK) in your portfolio?
For more than 30 years, the 'White List' has been offering an impartial guide to UK Equity Income funds with a track record of delivering rising dividends and long-term capital growth.
In its annual review, published in January, the White List identified JO Hambro UK Equity Income as the top fund by overall merit.
Three FTSE 100 heavyweights, which feature in the fund's top 10 holdings, caught my eye. What are the attractions of banking behemoth HSBC Holdings (LSE: HSBA) (NYSE: HBC.US), oil giant Royal Dutch Shell (LSE: RDSB) (NYSE: RDS-B.US) and big pharma group GlaxoSmithKline (LSE: GSK)?
HSBC Holdings
The FTSE 100's second-largest company, capitalised at over £130bn, was named the world's number-one bank brand in Brand Finance's 2012 bank brands list. While the company is phasing out its advertising tagline 'the world's local bank', its international reach remains immense.
HSBC's sheer size, the strength of its brand and its geographical diversity make this the bank for risk-averse investors.
At a recent price of 720p, HSBC trades at 1.3 times book value -- an indication of the market's belief in the quality of its assets compared with those of Lloyds and Royal Bank of Scotland, which both trade at a discount to book.
HSBC is also rated more highly on earnings, though the forecast 11.5 times 2013 earnings is below the FTSE 100 average. Meanwhile, the prospective dividend yield of 4.2% is almost a percentage point above the market average.
Royal Dutch Shell
The biggest company in the FTSE 100, valued at over £140bn, Shell achieved top spot in the 2012 Fortune Global 500, an annual ranking of the world's largest companies by revenue.
This global goliath operates in more than 80 countries and territories, employing around 90,000 people. Revenue last year topped £300bn.
Despite recent general investor optimism, Shell -- like other oil majors -- remains fairly unloved. The company's annual results, announced last week, underwhelmed the market.
At a recent share price of 2,290p, Shell is trading on just 8.5 times forecast earnings for 2013 and offers a prospective dividend yield of 5%, or one-and-a-half times the FTSE 100 average.
GlaxoSmithKline
The UK's £70 billion pharma giant ranks at number five in the FTSE 100 and is almost double the size of its nearest Footsie rival, AstraZeneca.
In addition to its main pharmaceutical and vaccine business, Glaxo has a consumer healthcare arm that provides around one fifth of the group's total revenues. Consumer favourites such as energy-drink Lucozade, toothpaste Sensodyne, and the Nicorette quit-smoking family of products provide Glaxo with useful business diversification to compliment its international geographical diversification.
Glaxo is being less affected by expiring drug patents that are doing so much to damage AstraZeneca's revenues and earnings. And this week's results from Glaxo are expected to be a good deal better than last week's from Astra.
At a recent share price of 1,450p, Glaxo is trading on 12.5 times forecast earnings for 2013. That isn't as cheap as HSBC or Shell, but Glaxo does offer the highest prospective dividend yield of the three at 5.3%.
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> G A Chester does not own shares in any of the companies mentioned in this article.
